Pan American Silver net soars; forex hurts

DrewFitzGerald

Pan American Silver Corp.'s (PAAS, PAA.T) third-quarter profit surged as revenue jumped on higher prices, although core results came in short of expectations as the company struggled with a foreign exchange loss and a negative adjustment that hit results.

Looking ahead, the company reduced its full-year consolidated silver production forecast to 22.5 million ounces, down from 23 million to 24 million ounces previously, citing a decision to demobilize a significant number of contract miners at its Morococha mine and other recent developments.

Pan American's earnings have soared over the past year as metals prices continue to climb. The Canadian company also produces lead, zinc and copper as a byproduct from its mines, which are spread across Mexico and South America.

Pan American reported a profit of $52.5 million, or 49 cents a share, up sharply from $972,000, or less than a penny a share, a year earlier. Adjusted earnings rose to 42 cents, which includes a $5.1 million negative adjustment related to declining metal prices and a foreign exchange loss of $12.5 million.

Revenue jumped 34% to $220.6 million, as significantly higher realized prices for all metals sold by Pan American helped offset lower quantities sold of silver, zinc, lead and copper.

Analysts polled by Thomson Reuters expected a 78-cent per-share profit and $261 million of revenue.

Silver production declined 10% to 5.6 million ounces, while gold production slipped 3%.

Shares closed Tuesday at $30.11 and were inactive premarket. The stock is down 27% since the start of the year.

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